In the March 2018 Edition of the Aetna OfficeLink Update, Aetna announced a major change to their observation notification policy. Effective July 1, 2018, Aetna will “no longer require notification for observation greater than 24 hours.”

This change will come as a relief to many hospitals. The soon-to-be phased out Aetna policy, in practice, caused Aetna to refuse observation notification until 24 hours had elapsed, but then after the 24 hour mark would require notification within the inpatient notification timeframes. This differs from most insurers, who would require observation notification for observation care of any length, or not require observation notification at all. Aetna’s policy proved to be difficult to operationalize for many facilities, and in our experience, led to denials. For example, we have seen administrative denials under this policy for lack of notification because facility tried to notify after only 23 hours.

However, there is a catch. With the change to no longer require notification for observation over 24 hours, Aetna has also stated that it will “no longer cover observation services that extend beyond 48 hours.” We expect that this hard cap on observation hours will prove challenging for many hospitals, particularly for the rare occasion when a patient meets neither discharge nor inpatient admission criteria after 48 hours in observation.

We recommend a two-pronged approach to address hard caps on observation.

Cite to the insurer’s own clinical policy: Does the insurer’s clinical policy forbid admitting a patient inpatient under your circumstances? Does the insurer’s clinical policy discuss situations in which observation stays of over 48 hours would be considered medically necessary?

Use your best facts: Did the insurer approve observation care for longer than 48 hours? Does state law, federal law, or your contract dictate coverage under these circumstances?

Preventing new denials:

Contract around the policy: If a policy like this has proven costly for your facility, have you considered working modifications to the policy into your contract?

Scrutinize your internal administrative and utilization review protocols: Are you conducting regular, documented reviews against a major criteria set? Are patients being upgraded to inpatient or discharged when appropriate?

Given this change effective 07/01/18, facilities should make sure that their utilization review and case management staff is aware of this change so that it is incorporated into their practices. As with anything in the insurance world, an ounce of prevention equals a pound of cure. We encourage providers to take action now so that their facilities are prepared for these new policies when they go into effect.

Emily Blizzard, Esq. is an associate attorney at The Law Offices of Fotheringill & Wade, LLC. Ms. Blizzard represents healthcare providers in the appeal of denied and underpaid claims and has experience with both governmental and third party payers. Ms. Blizzard graduated magna cum laude from Michigan State University College of Law and is admitted to the Maryland Bar.

Almost every day, one of our hospital clients refers a case to our firm that has us questioning how an insurer could have reached the decision they did.

We got a unique look into the inner workings of Aetna’s utilization management department this week with the bombshell revelation, reported by CNN, that a former Aetna Medical Director, Dr. Jay Ken Iinuma admitted in a deposition that he never looked at a patient’s medical records during his time at Aetna.

What’s worse? Dr. Iinuma further testified that this was what he was instructed to do in Aetna’s training for the position.

The State of California’s insurance commissioner has launched an investigation into the practice, and we expect other states to follow. Not only does this practice raise serious questions about the plan’s adherence to member agreements to cover medically necessary care, but it may run afoul of state regulations requiring that utilization review be performed by a qualified medical professional.

What should medical professionals do with this information? It is a good practice to have a robust denials management system in place at your practice or facility. Take advantage of peer-to-peer review rights and file appeals. Keep an eye on timeframes, as a lot of contracts take away an opportunity to challenge even egregious denials after these timeframes pass.

At Fotheringill & Wade, some effective strategies we employ include:

Checking the credentials of the person at the insurer who made the decision. Was it a medical professional? Does the contract or state law provide for a doctor versus a nurse to issue the denial? Can we discount the insurer’s position by noting that the reviewer has no experience in the patient’s condition?

Finding the insurers’ clinical policy and referring directly to it. It is effective, though time-consuming, to match medical record citations with clinical policy prongs. Did the insurer use the correct policy for the patient’s condition to issue its denial? Assume (and now we have reason to!) that the doctor isn’t taking even a cursory glance at the medical records.

Pushing back when a denial is egregious. Complain! Take the matter to your provider representative; talk to the plan’s compliance department or legal counsel. Take advantage of external appeals. Don’t take “no” for an answer when the plan seems to be ignoring the words on the page.

As with all things, experience counts. We have a great track record of helping our hospital clients with insurance denials. If you are struggling with insurance denials, you aren’t alone! Contact us to discuss your insurance denial management.

On Friday, November 3, 2017 CMS announced that it will make available a new settlement option for eligible providers and suppliers with a low volume of Medicare Part A and B claim appeals pending at OMHA and/or the Medicare Appeals Council. CMS also announced that OMHA will be expanding the Settlement Conference Facilitation Process for certain appellants that are not eligible for the LVA option.

Low Volume Appeals

The low volume appeals settlement option (LVA) will be limited to appellants with a low volume of appeals pending at OMHA and the Council. Specifically, appellants with fewer than 500 Medicare Part A or Part B claim appeals pending at OMHA and the Council, combined, as of November 3, 2017, with a total billed amount of $9,000 or less per appeal could potentially be eligible, if certain other conditions are met. CMS will settle eligible appeals at 62% of the net allowed amount. The announcement is posted on the CMS website.

Settlement Conference Facilitation (SCF) Expansion

SCF is an alternative dispute resolution process at OMHA and gives certain providers and suppliers an opportunity to resolve their eligible Part A and Part B appeals. Additional information on SCF can be found on the OMHA website.

In a letter dated October 2nd, the American Hospital Association has called on CMS to take a more active role regarding hospital compliance reviews conducted by the Office of Inspector General (OIG). Citing fundamental flaws and inaccuracies, both in the OIG’s understanding and application of Medicare payment rules and in the procedures used to conduct the audits, the AHA asserts that the flaws “result in vastly overstated repayment demands, unwarranted reputational harm, and diversion of hospital and physician leaders’ time from their core mission of caring for patients.” The AHA further asserts that the OIG’s mistaken legal interpretations result in uneven application of Medicare payment rules and that there is a lack of consistency in the appeals process.

Due to the OIG’s extrapolation of findings to all claims in an audit period the AHA asserts that the negative effects of the audits are “exacerbated.” Hospitals are forced to appeal each claim, creating a severe financial and reputational impact that continues long after the OIG’s errors are corrected on appeal. The AHA letter expressed concern that, based on information relayed in their meeting, the OIG now plans to extrapolate in every single hospital audit, despite the legal and statistical limitations on extrapolation and the significant concerns about the OIG’s sampling and extrapolation methodologies.

The AHA letter reiterates the following suggestions to improve the accuracy and fairness of the OIG audits, that were provide to CMS during their meeting:

In the 2018 OPPS proposed rule, CMS is moving ahead with a proposal to remove total knee replacements under CPT code 27477 (arthroplasty, knee, condyle and plateau; medial and lateral components with or without patella resurfacing (total knee arthroplasty)) from the inpatient-only list. If finalized, the procedure would be added to comprehensive APC (C-APC) 5115 (Level 5 Musculoskeletal Procedures) and assigned status indicator J1 (hospital Part B services paid through a C-APC).

The agency solicited comments from the public on whether total knee arthroplasty (TKA) should be removed from the inpatient only list in the 2017 OPPS proposed rule. In making the decision to officially propose removal of TKA from the IPO list the agency indicates that they have reviewed (1) the clinical characteristics of the TKA procedure and related evidence, including current length-of-stay (LOS) data for inpatient TKA procedures, (2) peer-reviewed literature related to outpatient TKA procedures, (3) input from the comment solicitation and (4) the professional opinions of orthopedic surgeons and CMS clinical advisors. CMS also indicated that they had taken into account the recommendation from the summer 2016 Advisory Panel on Hospital Outpatient Payment (HOP Panel) meeting that this procedure be removed from the IPO list. Based on their review and evaluation of the above, CMS has determined that the TKA procedure would be an appropriate candidate for removal from the IPO list.

CMS indicated that they “expect providers to carefully develop evidence based patient selection criteria to identify patients who are appropriate candidates for an outpatient TKA procedure as well as exclusionary criteria that would disqualify a patient from receiving an outpatient TKA procedure.” CMS believes that the subset of Medicare beneficiaries who meet patient selection criteria for performance of the TKA procedure on an outpatient basis may have the procedure performed safely in the outpatient setting.

CMS said removing the procedure from the inpatient-only list does not prohibit providers from performing it in an inpatient setting; it simply allows for Medicare coverage and payment for the procedure when performed in either the inpatient or outpatient setting. CMS reiterated that the decision regarding the most appropriate care setting for a given surgical procedure is a complex medical judgment made by the physician based on the beneficiary’s individual clinical needs and preferences and on the general coverage rules requiring that any procedure be reasonable and necessary. The agency indicated that it will prohibit Recovery Audit Contractor (RAC) review for patient status for total knee replacements in the inpatient setting for two years to allow time and experience for these procedures under this setting:

We would not want hospitals to err on the side of inappropriately performing the procedure on an outpatient basis due to concerns about the possibility of an inpatient total knee replacement claim being denied for patient status. That is, given that this surgical procedure would be newly eligible for payment under either the IPPS or the OPPS, RAC denial of a hospital claim for patient status would be prohibited.

In addition to total knee replacements, CMS is soliciting comment on removing partial and total hip replacements from the inpatient-only list. This proposal would affect procedures described by CPT codes 27125 (hemiarthroplasty, hip, partial [e.g., femoral stem prosthesis, bipolar arthroplasty]) and 27130 (arthroplasty, acetabular and proximal femoral prosthetic replacement [total hip arthroplasty], with or without autograft or allograft]). Specifically, CMS has requested comments addressing the following questions:

Are most outpatient departments equipped to provide PHA and/or THA to some Medicare beneficiaries?

Can the simplest procedure described by CPT codes 27125 and 27130 be performed in most outpatient departments?

Are the procedures described by CPT codes 27125 and 27130 sufficiently related to or similar to other procedures we have already removed from the IPO list?

How often is the procedure described by CPT codes 27125 and 27130 being performed on an outpatient basis (either in an HOPD or ASC) on non-Medicare patients?

Would it be clinically appropriate for some Medicare beneficiaries in consultation with his or her surgeon and other members of the medical team to have the option of either a PHA or THA procedure as a hospital outpatient, which may or may not include a 24-hour period of recovery in the hospital after the operation?

The agency is also soliciting comment on whether to add total knee replacements to the list of ambulatory surgical center-covered surgical procedures. Comments on the proposed rule are due by September 11th.